Oracle's Shares Plummet as Investors Fear AI Bubble Bursts
A disappointing quarterly earnings report from Oracle has sent shockwaves through the tech industry, causing its shares to plummet by 15% in a single day. The software giant's revenues rose by just 14%, beating expectations but not enough to stem concerns about an impending bubble in artificial intelligence-related stocks.
The company's valuations took a hit, falling by $80 billion from $630 billion to $550 billion, with chipmaker Nvidia also seeing its shares fall after Oracle's report. The AI boom has been a significant contributor to the growth of both companies, but investors are growing increasingly wary about the sustainability of this trend.
Oracle's guidance on artificial intelligence investment was particularly eye-catching, with capital expenditure set to jump by 40% to $50 billion in the next year. While the company is expanding its datacenter investments to fuel AI growth, analysts are warning that this heavy spending could prove unsustainable if investors start to lose confidence.
The report also revealed a growing debt pile for Oracle, which has surged by 25% over the past year to $99.9 billion. Even the cost of insuring this debt rose on Thursday as investor confidence waned.
Analysts have long warned that the AI bubble could be just around the corner, with some policymakers and business leaders predicting a collapse in stock market valuations if investors start to lose faith in the progress or adoption of AI technology.
While Oracle's results were not dramatically bad, they confirmed fears about heavy AI spending financed by debt. As Ipek Ozkardeskaya, senior analyst at Swissquote, noted: "The report was not dramatically bad, but it came to confirm concerns around heavy AI spending, financed by debt, with an unknown timeline for revenue generation."
For now, investors remain cautious about the prospects of AI-related stocks, which have seen significant valuations growth in recent months. As Kathleen Brooks, research director at XTB, observed: "Strong contract growth was not enough to placate fears about AI and the huge amount of spending required by companies to build AI infrastructure."
A disappointing quarterly earnings report from Oracle has sent shockwaves through the tech industry, causing its shares to plummet by 15% in a single day. The software giant's revenues rose by just 14%, beating expectations but not enough to stem concerns about an impending bubble in artificial intelligence-related stocks.
The company's valuations took a hit, falling by $80 billion from $630 billion to $550 billion, with chipmaker Nvidia also seeing its shares fall after Oracle's report. The AI boom has been a significant contributor to the growth of both companies, but investors are growing increasingly wary about the sustainability of this trend.
Oracle's guidance on artificial intelligence investment was particularly eye-catching, with capital expenditure set to jump by 40% to $50 billion in the next year. While the company is expanding its datacenter investments to fuel AI growth, analysts are warning that this heavy spending could prove unsustainable if investors start to lose confidence.
The report also revealed a growing debt pile for Oracle, which has surged by 25% over the past year to $99.9 billion. Even the cost of insuring this debt rose on Thursday as investor confidence waned.
Analysts have long warned that the AI bubble could be just around the corner, with some policymakers and business leaders predicting a collapse in stock market valuations if investors start to lose faith in the progress or adoption of AI technology.
While Oracle's results were not dramatically bad, they confirmed fears about heavy AI spending financed by debt. As Ipek Ozkardeskaya, senior analyst at Swissquote, noted: "The report was not dramatically bad, but it came to confirm concerns around heavy AI spending, financed by debt, with an unknown timeline for revenue generation."
For now, investors remain cautious about the prospects of AI-related stocks, which have seen significant valuations growth in recent months. As Kathleen Brooks, research director at XTB, observed: "Strong contract growth was not enough to placate fears about AI and the huge amount of spending required by companies to build AI infrastructure."
. They beat expectations on revenues but their valuations took a serious hit because investors are getting worried about the artificial intelligence bubble bursting 
. 14% revenue growth is okay, but it's not enough to impress when you're spending $50 billion on AI investments next year... that's like buying a whole new city 
. And let's not forget about their debt pile - $99.9 billion! That's like owing your neighbors a small fortune and then trying to convince them to lend you even more 
. I mean, I get it, AI is cool and all, but can't we just slow down for once? 
. We need more than just growth numbers; we need sustainable business models 
. Let this be a lesson to us all: don't chase the hype; focus on building solid foundations 
.
. I mean, who doesn't love a good correction in the market? But for real though, it's kinda worrying that investors are getting cold feet about AI stocks 
. Like, shouldn't we be encouraging more innovation and growth in this area? And btw, 40% jump in AI investment is not too shabby 
... or so I thought. Now I'm thinking maybe it's just a bubble waiting to pop 
. But at the same time, that's also kinda a good thing? Like, we should be worried about unsustainable growth and all that jazz, but on the flip side, maybe this means investors are getting a bit too greedy 
oracle's shares are tanking and it's all because of that ai bubble 
I mean i know some ppl were saying it was overhyped but still $80 billion? that's wild 
. So yeah, I think investors are getting a bit too ahead of themselves with AI hype. It's like they're expecting some sort of robot uprising and everyone needs a piece of the pie 
. The views were breathtaking, but I kept thinking about how they reminded me of a futuristic cityscape with all the towering skyscrapers... anyway, back to tech stuff 
. All these big tech companies are investing heavily in AI and it's making a lot of money right now, but what happens when the market gets wise to how unsustainable all that spending really is? 
). It made me think about how some of these tech companies are just relying too much on caffeine and hype to keep their stock prices up. I mean, come on, Oracle's got a debt pile that's out of control 
I just got into it last year and now all my friends are telling me it's gonna tank. What even is a tech bubble? Can't we just focus on making real change for once instead of chasing after some fleeting trend? 
.
but nobody really knows what's going on behind the scenes. I mean, $80 BILLION DOLLARS FELL OFF ORACLE'S VALUATION IN ONE DAY?!?! that's CRAZY TALK 
, only to have it blow up in our faces (literally 
). Not fun.
. I mean, we've seen this before in the dot-com era and now again with AI-related stocks 
. Policymakers and business leaders are warning about a potential collapse in stock market valuations if investors lose faith in AI technology 